Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly ¬リニ

a r t i c l e i n f o This paper investigates how socially responsible behaviour influences firms' profits and social welfare when production entails an environmental externality. We study a Cournot oligopoly with pollution, with one CSR operating in the market. A CSR firm not only takes into account its profits but also internalises its own share of pollution and is sensitive to consumer surplus. With a large enough market, the CSR firm obtains higher profits than its profit-seeking competitors, and induces a higher level of social welfare. The results are confirmed when a socially optimal tax on pollution is adopted. Indeed, even if the environmental concern restrains the production of a CSR firm, the social concern expands it. The second effect more than offsets the first one in a large market, making the CSR production strategy be more aggressive compared to its competitors. Corporate Social Responsibility (CSR) is a form of corporate self-regulation. A firm that follows rules of CSR (from now on, CSR firm) commits to a behaviour that takes into account not only the shareholder interests (profit), but also how the firm decisions affect the agents dealing with the firm (stakeholders), such as employees, business partners, consumers and the environment. 1 Over the past decades, an increasing number of private firms adopted a regime of CSR in any industry. 2 Public opinion and media increasingly demand companies to implement the social and environmental consequences of their activities and to provide more transparency with respect to their behaviour (Freeman et al., 2010). As a consequence, CSR has been ranked in 2011 as the number one focus of managers in the global retail and consumer goods sector (The Consumer Good Forum, 2011). While many firms now adopt some form of social responsibility, some are making it a core of their operations. For example, Starbucks has developed its C.A.F.E. guidelines, designed to take care of social and environmental aspects of coffee production. Tom's Shoes donates one pair of shoes to a child in need for each pair sold. Ben and Jerry's makes use of only fair trade ingredients and has created a dairy farm sustainability programme (Fallon, 2014). One important aspect of CSR behaviour is the commitment towards the environmental impact of the firm. There are generally three explanations on why firms adopt CSR principles with the respect to environmental issues: [i] the firm may rationally anticipate …